Northfield Bancorp, Inc. (NFBK), TFS Financial Corporation (TFSL): This Thrift Conversion Looks Interesting

TFS Financial Corporation (NASDAQ:TFSL) generated the lowest net interest margin among the three of only 2.39%. However, its efficiency ratio is lower than that of Northfield at 59.67%. Like the other two banks, certificates of deposits accounted for 69% of the total deposits in 2012. Savings accounts ranked second with $1.77 billion in deposits, accounting for 19.8% of the total deposits, while the negotiable order of withdrawal accounts was more than $1 billion. TFS Financial Corporation (NASDAQ:TFSL) focuses on real estate lending, as its residential real estate loans were more than $8.1 billion, accounting for 78.5% of the total loans outstanding. Home equity loans and lines of credits ranked second, with $2.15 billion in loans, representing 20.8% of the total loans.

Among the three, Northfield Bancorp, Inc. (NASDAQ:NFBK) seems to be the most conservative with the highest loan loss reserve ratio of 2.08%. The loan loss reserve ratio of Investors Bancorp and TFS Financial are much lower, at 1.41% and 1%, respectively. TFS Financial is trading at $11.20 per share with a total market cap of $3.4 billion. The market values TFS Financial Corporation (NASDAQ:TFSL) at as high as 1.82 times its book value.

My Foolish take

Income investors might like Investors Bancorp the most, as it is the only dividend-paying bank among the three. However, the dividend yield is small at only 1%. Among the three, I like Northfield the most due to its lowest price-to-book valuation and the highest loan loss reserve.

The article This Thrift Conversion Looks Interesting originally appeared on Fool.com and is written by Anh HOANG.

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